September 2004

HOW TO SURVIVE AN INLAND REVENUE ENQUIRY - TOP TIPS

Record Keeping
• Keep clear explanations of the items that appear in your tax return.
• If in business ensure that the bookkeeping system provides an easily followed audit trail.
• If in business operate a separate bank account.

Archiving and storage of records
• There is no use in keeping good records if you cannot lay your hands on them when asked – have a good filing system.
• Regularly check that your records are safe.
• Must keep records for at least 6 years.
• If in business, archive personal bank statements and credit card statements as well as business statements – theses are sometimes asked for and copies are difficult and expensive to obtain.
• If keeping computer records ensure you still have the necessary software to re-load the records if necessary.
• If you lose your records, e.g. in a fire, consider advising the tax authorities.

Unusual or One-off transactions
• Keep a special record any unusual or one-off transactions.
• Get specific advice relating to any unusual or one-off transactions.
• If you are in business you should also record unusual or one-off personal transactions, even if you think there is no tax implications.

Regular Inspections
• Keep a note of when they occurred and which official undertook them.
• Keep records of the feedback.

During the enquiry
• Consider being represented by an advisor – would you represent yourself in court?
• Tax specialists deal with the tax authorities and tax enquiries on a daily basis – how many enquiries have you dealt with?